/>iBecerra v. Dr. Pepper/Seven Up, Inc., No. 18-16721, __ F.3d __, 2019 WL 7287554 (9th Cir. Dec. 30, 2019)
Consumer failed to allege that reasonable consumers understood the word “diet” in Diet Dr. Pepper’s brand name to promise weight loss, and reference to an alleged consumer survey was insufficient to avoid dismissal.
In this case, plaintiff alleged that the defendants violated various California consumer-fraud laws by branding Diet Dr. Pepper using the word which allegedly misled consumers by promising that the product would “assist in weight loss” or at least “not cause weight gain,” and that the alleged promise was false because aspartame caused weight gain. Plaintiff cited dictionary definitions of “diet” to support her allegation that consumers would reasonably believe the word “diet” to promise assistance in weight loss. She also included references to television advertisements and articles to support her allegation that reasonable consumers understand “diet” to promise weight loss. And she summarized results of a survey of California and national consumers, which she contended was proof that most soft-drink consumers believe “diet” soft drinks will help them lose or maintain their weight.
In affirming a decision granting defendants’ motion to dismiss, the Ninth Circuit first noted that plaintiff’s citations to dictionary definitions involved the use of “diet” as a verb or noun, as in “he is dieting” or “she is starting a diet.” The court noted that in contrast, “diet” as used in “Diet Dr. Pepper” is either an adjective or proper noun, which puts the word in a different light. The court held that plaintiff’s selective quotations omit the definitions of “diet” as an adjective and the frequent usage of “diet soft drinks” as the primary example of the word’s usage in that context to mean “reduced in or free from calories.” The court held that, when considering the term in its proper context, no reasonable consumer would assume that Diet Dr. Pepper’s use of the term “diet” promises weight loss or management. The court also held that the articles plaintiff cited did not support her claims as a matter of law, because the content of these articles emphasizes that other lifestyle changes beyond merely drinking diet soft drinks are necessary to see weight-loss results. Finally, the court held that the survey plaintiff cited did not address a reasonable consumer’s understanding of “diet” in this context to be a relative claim about the calorie or sugar content of the product.
Henson v. Fidelity National Financial, Inc., 943 F.3d 434 (9th Cir. 2019)
Based on intervening change in law, Ninth Circuit gives plaintiffs the opportunity to pursue class allegations that had been voluntarily dismissed with prejudice.
In this decision, the Ninth Circuit clarified the standard that applies to a request under Rule 60(b) for relief from judgment. Plaintiffs asserted claims for violations of the Real Estate Settlement Procedures Act, alleging that Fidelity had improperly received kickbacks in connection with directing business to certain vendors. Plaintiffs moved for class certification, which the district court denied, and then voluntarily dismissed the action with prejudice by stipulation. Under then-existing Ninth Circuit authority, that stipulation would create an adverse final order, and thus the right to pursue a non-discretionary appeal of the certification ruling.
While the appeal was pending, the United States Supreme Court issued its decision in Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017), holding that plaintiffs cannot use a voluntary dismissal with prejudice to transform an interlocutory order into an appealable final judgment. The Court reasoned that a contrary conclusion would be inconsistent with the “firm finality principle” stated in 28 U.S.C. § 1291 and Rule 23(f), which confers discretion upon district courts to permit interlocutory review of class certification orders.
Fidelity moved to dismiss the Henson appeal based on Microsoft. The Ninth Circuit denied the motion and remanded for further proceedings in the district court. Following remand, plaintiffs moved to vacate the dismissal under Rule 60(b), arguing that Microsoft was an intervening change in the law and, as such, they were entitled to relief. The district court denied the motion and, upon review, the Ninth Circuit reversed, finding that the district court erred in the Rule 60(b) analysis.
The Ninth Circuit held that the appropriate analysis involves consideration of the following factors, along with any others that might be relevant: (1) the nature of the intervening change in law; (2) the petitioner’s diligence in pursuing relief; (3) whether granting relief would upset the parties’ interests in finality; (4) the delay between the finality of the judgment and the Rule 60(b) motion; (5) the closeness of the relationship between the decision underlying the judgment and the intervening change in law; and (6) comity considerations.
Applying the requisite factors, the Ninth Circuit found that plaintiffs were entitled to relief from the judgment, stating that the factors “heavily [tipped] the scales” in plaintiffs’ favor. In particular, the Ninth Circuit noted that plaintiffs reasonably relied on its prevailing authority at the time in agreeing to a dismissal so as to seek appellate review of the certification denial. Also, because the parties reached this agreement for purposes of the appeal, Fidelity “could not have reasonably believed that the dismissal was immutably final.”
In re Pacquiao-Mayweather Boxing Match Pay-Per-View Litigation, 942 F.3d 1160 (9th Cir. 2019)
Unhappy spectators at a sporting event fail to state consumer fraud claims against boxer who did not disclose injury prior to a bout.
In this case, consumers and commercial entities brought putative class actions against boxers, personnel associated with them, and a broadcaster, alleging they had been defrauded by concealment of a shoulder injury suffered at training camp by the boxer who lost the bout in question. Upholding the district court’s order dismissing the case, the Ninth Circuit held that the consumers and commercial entities were not defrauded by the failure to disclose this information and had not suffered cognizable injury, because, in short, they got what they paid for. Specifically, the plaintiffs merely purchased a license to view the sporting event in question and see what transpired, even if it was not as exciting or good a fight as they may have expected because one of the contestants was recovering from an injury. The court distinguished this case from cases where games were cancelled, strike replacement players were used, or the contestants did something absurd, such as play a different sport.
Johnson v. MGM Holdings, Inc., 943 F.3d 1239 (9th Cir. 2019)
Ninth Circuit encourages courts to cross-check their attorneys’ fee awards using a second method of fee calculation.
Following a settlement in a consumer protection class action against a seller of movie boxsets, plaintiff moved for an award of $350,000 in fees. The district court conducted a lodestar analysis of class counsel’s billing and applied a 25% cut to the class counsel’s hours, and ultimately awarded $184,665 in attorneys’ fees. The district court explained that the 25% cut was to account for 1) some block billing; 2) excessive time spent on law firm conferences that did not advance the case or interests of the class; 3) unreasonable travel time billed without any showing that substantive work was performed; 4) duplicative work; 5) unsupported identical conclusory statements of class counsel as the only explanation for why the hours requested were reasonable; and 6) puffery in describing work performed. Plaintiff appealed, arguing that the entire award was arbitrary because the district court did not adequately explain its decision to cut the number of hours by 25%.
The Ninth Circuit affirmed the award and held that the district court’s cross-check provided support for the ultimate reasonableness of the district court’s award. The Ninth Circuit noted that the district court 1) provided an explicit lodestar calculation to determine the reasonable hourly rate and number of hours expended by class counsel; 2) provided six reasons why a 25% reduction was appropriate; and 3) conducted a percentage-of-recovery analysis as a cross-check. Thus, the district court had provided more than sufficient basis for the Ninth Circuit to evaluate the award.
Roes, 1-2 v. SFBSC Management., LLC, 944 F.3d 1035 (9th Cir. 2019)
Ninth Circuit reverses class action settlement approval based on inadequate notice program and concerns for unfairness.
Exotic dancers brought claims under state law and the Fair Labor Standards Act against various clubs in San Francisco, alleging that they were misclassified as independent contractors. Before certification of any class, the parties reached a class settlement that provided for monetary and injunctive relief, with a claims process. The settlement agreement provided that mailed notice would go out once, after a National Change of Address update; the claims administrator would post notice on the settlement website; and notice posters would be displayed in the clubs’ dressing rooms. Following preliminary approval, which was granted over various objections, the administrator mailed 4,681 notices and, after returns and then skip tracing, 560 never were delivered. The district court granted final approval, again over objections.
The Ninth Circuit reversed, finding, as an initial matter, that the notice program did not meet Rule 23’s due process standard – i.e., “the best notice that is practicable under the circumstances.” The Ninth Circuit accepted the proposition that, in the modern age, it is common to send notice by email, to send notice more than once and even to use social media or electronic message boards. The Ninth Circuit also noted that, for former employees, the notice was particularly insufficient. Those dancers were more likely to not have a current address on file, and also would not have seen the poster displays at the clubs. The Ninth Circuit therefore found that the notice program was not “reasonably calculated” to be effective. In addition, the Ninth Circuit criticized various elements of the settlement, such as a “clear sailing” attorneys’ fees agreement, a potential reversion of certain settlement funds to defendants, and large incentive awards provided to two named plaintiffs, as compared to the others.
Willis v. City of Seattle, 943 F.3d 882 (9th Cir. 2019)
Allegations of individual instances of mistreatment, without more, do not constitute an overarching policy of wrongdoing.
Homeless individuals who lived outdoors on public property filed a putative class action seeking declaratory and injunctive relief against the City of Seattle and Washington Department of Transportation (DOT), claiming these authorities engaged in a policy and practice of “sweeps” of encampments that destroyed individuals’ property, violating the unreasonable seizure and due process clauses of both the United States Constitution and the Washington State Constitution. Plaintiffs presented voluminous declarations, photographs, and videos of sweeps in support of their motion for class certification. The district court, however, denied plaintiffs’ motion for class certification, finding that, while the homeless individuals satisfied the numerosity requirement, they failed to establish sufficiently the existence of a practice that applied uniformly to all proposed class members. Plaintiffs appealed.
The Ninth Circuit affirmed the denial, holding that plaintiffs failed to articulate a practice that was common to the claims of the proposed class. Even though plaintiffs had presented a voluminous record of individual instances of sweeps, there was no evidence that every homeless individual experienced the same challenged practice or suffered the same injury under the government’s policy and practice. In fact, plaintiffs had acknowledged that each sweep was different. Thus, the Ninth Circuit held that the district court did not abuse its discretion in denying certification.
Holcomb v. Weiser Security Services, Inc., No. 219CV02108ODWASX, 2019 WL 6492244 (C.D. Cal. Dec. 3, 2019); Lopez v. First Student, Inc., 2019 LEXIS 218515 (C.D. Cal 2019)
In wage-and-hour cases, courts evaluate the reasonableness of assumed violation rates on motions to remand following CAFA removal.
In Holcomb, plaintiff asserted 10 causes of action against his employer, on a proposed class-action basis, alleging failure to provide wages and rest periods, among other things. The employer removed the case and plaintiff filed a motion to remand, arguing that the removal relied on “speculative violation rates” to establish the amount in controversy. The court noted that “violation rates” in wage-and-hour cases are “key to the calculations” necessary to the amount-in-controversy analysis, and that there are two notable “end points.” On the one hand, it could be reasonable to assume a 100% violation rate based on an allegation of a “uniform practice.” On the other hand, it would be unreasonable to do so based on an allegation of a “pattern and practice” of violations. Applying these principles, the court found that the evidence submitted – a declaration stating only the number of employees in the proposed class, the weighted hourly rate for the employees, and the number of work weeks – did not support the use of a 100% violation rate. The court also noted the presence of pattern and practice allegations (e.g., engaging in certain conduct repeatedly) in the complaint, and allegations suggesting less than a uniform practice. The court therefore granted the motion to remand.
Meanwhile, in Lopez, plaintiffs sued their employer for, among other things, failure to pay split-shift wages and failure to provide adequate wage statements. The employer removed, and plaintiffs moved to remand, contesting the showing on amount-in-controversy. In this instance, the court denied the motion to remand, finding that plaintiff’s allegations, on their face, supported an assumption of a 100% violation rate. The court noted that plaintiffs’ allegations were “as general and expansive as possible, presumably for the purpose[s] of alleging as large a class of individuals as possible [and maximizing recovery]” and that plaintiffs’ “failure to limit their allegations in any meaningful way” justified the assumptions of a 100% violation rate.
Wishnev v. Northwestern Mutual Life Insurance Co., 8 Cal. 5th 199 (2019)
California Supreme Court holds that insurers are exempt from disclosing compound interest charges under state law.
An insured commenced a putative class action in state court against a life insurer, asserting causes of action for declaratory judgment, violation of the Unfair Competition Law (UCL), violation of usury law under the California Civil Code, and unjust enrichment and money had and received, based on allegations that the insurer charged compound interest on life insurance policy loans without his written agreement that interest would be compounded. Northwestern Mutual removed the action to federal court pursuant to the Class Action Fairness Act (CAFA) and moved to dismiss. The district court denied the motion to dismiss. Northwestern Mutual appealed to the Ninth Circuit, and the case was consolidated with appeals in similar proposed class actions filed against Metropolitan Life Insurance Co. and New York Life Insurance Co. over the interest charges. After hearing arguments in the consolidated appeals, a Ninth Circuit panel sought the California Supreme Court’s guidance on whether insurers are exempt from the restrictions on compound interest charges.
The California Supreme Court unanimously found that insurance carriers are not subject to a provision of the state’s constitution that generally requires lenders to obtain borrowers’ signed consent before they can charge compound interest on loans. The restriction initially went into effect in 1918 after California voters approved an initiative measure designed to streamline the regulation of California lenders. But in 1934, an amendment to the measure exempted certain lenders from the restrictions, including credit unions and some banks. Subsequently, in 1979 and 1981, additional amendments expanded the list of exempt lenders. The California Supreme Court held that the 1934 amendment implicitly repealed the limitation on compound interest charges for exempt lenders, including insurers such as Northwestern Mutual. However, the court clarified that this “does not mean exempt lenders may charge compound interest without a contractual or legal basis to do so. It simply means they are not subject to statutory liability and penalties otherwise imposed by the 1918 initiative on nonexempt lenders.”
Modaraei v. Action Property Management, Inc., 40 Cal. App. 5th 632 (2019)
California Court of Appeal holds that if the parties’ evidence is conflicting on the issue of whether common or individual questions predominate, the trial court is permitted to credit one party’s evidence over the other’s in determining whether the requirements for class certification have been met.
Plaintiff, a former community manager (CM) of a property management company that provided services for common interest developments, brought a proposed class action for misclassification of CMs and general managers (GMs) as exempt employees rather than non-exempt employees under Industrial Welfare Commission wage order No. 5-2001. Plaintiff moved to certify two subclasses of employees: CMs and GMs from 2008 to 2017, based on a common core of non-exempt tasks. Plaintiff presented eight declarations of and deposition testimony from nine CMs and GMs stating that while the properties they managed were different, responsibilities and tasks the managers performed were the same. In contrast, Action Property Management, Inc. (APM) presented declarations of more than 30 putative class members, showing variations in complexity of the tasks performed and time CMs and GMs spent on those tasks. For instance, properties that CMs and GMS managed varied “in size from a single building with 28 units to a property with 2,892 single-family residences…. Individual home values across properties rang[ed] from $200,000 to $30,000,000. Amenities varied from properties with a few amenities to a property with a club house, swimming pool, tennis courts, bocce ball courts, fitness center, learning center, ballroom, café, spa, conference rooms, and a golf course. Some managers supervised no other employees, while one supervised as many as 80.”
The trial court compared and contrasted evidence presented by both parties, crediting APM’s evidence over plaintiff’s and concluding that the liability for each class member would turn on how individuals actually spent time on a property-by-property basis and manager-by-manger basis. Thus, the trial court denied Plaintiff’s motion for class certification, stating that plaintiff failed to show predominance of common questions and superiority.
The California Court of Appeal for Second Appellate District affirmed the trial court’s order denying plaintiff’s motion for class certification. It held that when “the parties’ evidence is conflicting on the issue of whether common or individual questions predominate (as it often is…), the trial court is permitted to credit one party’s evidence over the other’s in determining whether the requirements for class certification have been met.” Thus, the trial court’s weighing and crediting one party’s evidence over conflicting evidence from another party did not constitute an “improper criteria” or “incorrect legal analysis” that would warrant a finding of an abuse of discretion. In addition, the Court of Appeal also detailed the wide variety of tasks performed by CMs and GMs identified in APM’s evidence and held that substantial evidence supported the trial court’s finding.
Sarun v. Dignity Health, 41 Cal. App. 5th 1119 (2019)
California Court of Appeal holds that trial court erred in finding no ascertainable class where the definition was defined in objective terms that would allow members to identify themselves without an unreasonable commitment of expense or time.
A patient filed a putative class action against a hospital, alleging unfair and/or deceptive business practices under Business and Professions Code section 17200 (UCL) and violation of the Consumers Legal Remedies Act (CLRA), and seeking declarations that the hospital’s billing practices as they related to uninsured patients who received emergency care were unfair and/or unconscionable. The trial court denied the motion for class certification, finding the class was not ascertainable. According to the trial court, common issues of fact did not predominate because it would be necessary to determine whether thousands of individual rates were reasonable or unconscionable to provide meaningful relief. For the same reason, a class action was neither manageable nor a superior method for resolving the litigation. The patient timely appealed.
The Court of Appeal for the Second Appellate District reversed the trial court’s denial and remanded with directions. Applying the California Supreme Court’s recent decision in Noel v. Thrifty Payless, Inc., 7 Cal. 5th 955 (2019), the Court of Appeal noted that “the threshold requirement of ascertainability for class certification is satisfied when the class is defined in terms of objective characteristics and common transactional facts that make the ultimate identification of class members possible when that identification becomes necessary. We regard this standard as including class definitions that are sufficient to allow a member of the class to identify himself or herself as having a right to recover based on the class description.” According to the Court of Appeal, the trial court had used an unduly restrictive standard to evaluate the proposed class’s ascertainability and erred when it found no ascertainable class existed. Thus, the class of patients treated at the hospital and either billed at full published rates or at rates with uninsured discounts was an ascertainable class.
Williams-Sonoma Song-Beverly Act Cases, 40 Cal. App. 5th 647 (2019), review denied (Jan. 2, 2020)
California Court of Appeal holds that Song-Beverly Credit Card Act of 1971 does not prohibit merchants from requesting a consumer’s personal identification information unless the request is made under circumstances that would lead a reasonable person to believe the information is required to complete a credit card sales transaction.
This case involved alleged violations of the Song-Beverly Credit Card Act of 1971 (“Song-Beverly Act”). The Song-Beverly Act makes it unlawful for merchants to request or require customers to provide personal identification information as a condition to accepting a credit card payment. Plaintiffs alleged that retailer Williams-Sonoma, Inc. violated the Song Beverly Act by requesting and recording zip codes and/or email addresses from customers who used credit cards for in-store purchases between 2007 and 2011. Williams-Sonoma argued that liability under the Song-Beverly Act depends on requesting or requiring personal identification information as a condition to accepting credit card payment. Williams-Sonoma presented testimony and evidence that its employees were trained to explain that zip codes and email addresses were requested solely for marketing purposes and were not required to make purchases. Williams-Sonoma had also posted signs at the cash registers stating the same. Moreover, the employees had discretion not to solicit a customer’s zip code or email and were neither rewarded for collecting personal identification information nor disciplined for not soliciting such information.
The trial court initially granted plaintiffs’ motion to certify the class of all persons from whom Williams-Sonoma requested and recorded such information in conjunction with a credit card purchase, but subsequently decertified the class. It held that any violation under the Song-Beverly Act would depend on the conditions of individual transactions (i.e., presence and visibility of posted signs or verbal advisements by the sales clerk) and whether any given customer provided personal identification information under circumstances that would lead a reasonable person to believe that such a provision was necessary to complete the credit card transaction. Because of the variations and plaintiffs’ lack of a trial plan to manage the individual liability issues, the trial court held that the class action was not manageable.
On appeal, the California Court of Appeal for the First District affirmed the trial court’s order decertifying the class, holding that the trial court correctly applied the legal standard stated in Harrold v. Levi Strauss & Co., 236 Cal. App. 4th 1259 (2015), and that its ruling was supported by substantial evidence. In Harrold, the Court of Appeal held that the Song-Beverly Act does not prohibit merchants from requesting personal identification information unless the request is made under circumstances that would lead a reasonable person to believe the information is required to complete the transaction. Consistent with Harrold and other authorities, the trial court had correctly ruled that the Song-Beverly Act is violated only if the retailer requests personal identification information under circumstances in which a reasonable customer would understand the information was required to complete the credit card transaction.
Please see news from other circuits here: Class Action Litigation Newsletter | Winter 2019/2020
